The behind-the-scenes battle for CBS has been filled with more twists and turns than many of the scripted dramas on the company’s TV network. Shari Redstone, leading the charge for the Redstone family, and Chairman and Chief Executive Leslie Moonves have been locked in a war over whether CBS Corp. will merge with Viacom Inc., also controlled by the Redstones.
But for all the boardroom intrigue and legal maneuverings on both sides, CBS’ uncertain future is just the latest conflict for the Redstone family. The last three years have also seen longtime head Sumner Redstone step down as chairman, lawsuits contesting his mental competency and the ouster of Viacom Chairman and CEO Philippe Dauman.
Here’s a look back on the Redstones’ previous battles, and the latest on the fight for CBS.
Amid reports about his declining health, then 92-year-old Sumner Redstone issues a statement confirming that his successor as chairman of CBS and Viacom will be chosen by the boards of both companies, “and not by any individual.” Speculation then also begins about whether CBS and Viacom may merge nine years after the companies split in 2006.
After being removed as his primary caretaker and kicked out of his Beverly Park mansion, Redstone’s former companion Manuela Herzer files a lawsuit seeking to have the mogul found mentally incompetent. She said she wanted to return to his home and manage his care. His lawyers counter the suit was a ploy to avoid being cut out of his will.
Although requests for medical tests of Redstone are waived in court, one of Viacom and CBS’ major stockholders still wants that information. GAMCO Investors Chief Executive Mario Gabelli calls on both media companies to disclose Redstone’s health condition so that investors can decide whether Redstone can continue as chairman.
The board members of Viacom and CBS are sued by an investor, E.F. Greenberg, who accuses the media companies of protecting the interests of Redstone at the expense of corporate shareholders. In addition to Redstone and his daughter, Shari Redstone, other defendants named in the suit include Dauman and Moonves. Three days later, a judge orders an exam of Sumner Redstone.
After intense questioning about his health fueled by disclosures that came out of Herzer’s lawsuit, Redstone resigns as chairman of Viacom and CBS. The latter’s board members vote unanimously to elect Moonves as chairman. The sailing is not as smooth at Viacom, where Shari Redstone is the only board member not to vote for her father’s longtime No. 2, CEO Dauman, to become chairman of Viacom.
Viacom announces that it is exploring a sale of a minority stake in Paramount Pictures to raise money to prop up the company’s flagging fortunes. The possible sale comes as the legal battle over Sumner Redstone’s compentency continues in court.
Days after Sumner Redstone gives a videotaped deposition to fend off questions about his mental competency in the suit brought by former companion Herzer — which includes him stating, “I hate her,” and, “I want Manuela out of my life” — the lawsuit is dismissed.
Shari and Sumner Redstone move to have Dauman and his attorney George Abrams removed as trustees of National Amusements Inc., the Redstone family investment vehicle that holds the controlling shares of Viacom and CBS. (It’s later revealed that that decision was prompted by the Redstone family’s alarm over Dauman’s plan to sell a stake in Paramount.) Dauman and Abrams file suit days later, claiming that Sumner Redstone is being manipulated by his daughter. A month later, Sumner and Shari attempt to have both men removed from the Viacom board with an eye toward ousting Dauman as chairman of the company.
Speculation about CBS and Viacom merging begins to heat up, with Moonves seen as a likely candidate to lead the combined companies thanks to CBS’ continued success (and Dauman’s unclear future at Viacom).
Just one month after appointing him interim CEO, Viacom announces that Dooley will step down from his post. The same day, the company announces that Paramount Pictures is on track to lose $450 million that fiscal year.
Sumner and Shari Redstone go on the record in favor of merging the two companies with a letter sent to the boards of directors of Viacom and CBS. “We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape," the Redstones write.
Moonves soon emerges as the Redstones’ top choice to lead CBS and Viacom.
Robert Bakish, Viacom’s head of international operations, is named acting president and chief executive, becoming the company’s third CEO in less than three months. He takes the job on a more permanent basis in December. Tapping an insider for the post signals that Viacom’s board is open to a reunion with CBS
Shari Redstone surprises investors when she abruptly scraps the proposed CBS-Viacom merger. “After careful assessment and meetings with the leadership of both companies, we have concluded this is not the right time to merge the companies,” she and her father write in a letter to the Viacom and CBS directors.
Sumner Redstone announces he will step down from the Viacom board after the company’s annual meeting in February 2017. Although he will continue to serve as chairman emeritus, he will no longer hold a voting role.
After digging into the inner workings of Viacom’s businesses to diagnose myriad problems, Bakish announces a massive reorganization of Viacom’s cable channels that will focus on “flagship brands” such as MTV, Comedy Central and Nickelodeon. He also announces plans to concentrate more of Paramount’s slate on films with ties to Viacom’s TV channels.
After several weeks of reports, a potential Viacom-CBS merger begins to take shape when both companies’ boards decide to form special committees to evaluate whether a consolidation of the two media companies would benefit shareholders.
CBS makes a lowball bid to buy Viacom, making an all-stock offer placed at a lower valuation than its current market capitalization of about $12.2 billion. The deal stipulates that Moonves would run the combined company for at least two years. The offer reportedly upsets Shari Redstone as tensions begin to rise. Redstone wants her hand-picked lieutenant, Bakish, to have a prominent role in the merged company — but Moonves viewed that as a nonstarter. Days later, Viacom asks CBS to raise its bid by $2.8 billion.
As talks stall over price and Bakish’s role, CNBC reports that Shari Redstone would oust Moonves as CBS boss if he refuses to go along with the merger. The report ignites tensions, and CBS soon issues a terse response: “The industry and the marketplace know Leslie Moonves’ record, and we think it speaks for itself.”
After a special committee of its board formally rejects the CBS-Viacom merger, CBS chooses the “nuclear option,” as one analyst calls it, and sues to strip the Redstone family of its controlling stake in CBS. The company specifically asks for a temporary restraining order to prevent Shari Redstone and National Amusements from using their influence on the CBS board — a move that CBS board members alleged would harm shareholders and the company.
In the midst of the legal battle for CBS, Moonves appears at the network’s annual upfront presentation at Carnegie Hall in New York City — prompting a rare standing ovation from Madison Avenue. “How’s your week been?” he quips to the crowd. Meanwhile, in Delaware, a judge issues an order preventing any changes to the CBS board hours after the Redstone family unilaterally voted to change CBS’ bylaws to require a 90% vote of the board for important matters.
A judge refuses to issue a temporary restraining order sought by CBS against the Redstone family. However, Wall Street is less than thrilled about the Redstones’ victory, and CBS shares fall to $51.61, down from $60.53 in December 2017. Meanwhile, CBS board members not associated with the Redstones vote to dilute CBS shares in a move that would essentially strip the Redstone family of its control. The vote was 11 to 3 against the Redstone family. However, the move must be approved by a judge in Delaware.
In a filing with the Securities and Exchange Commission, CBS says it plans to contest the bylaw changes made the previous week by the Redstone family, which essentially ensure that the Redstones must be on board with any major changes at the company. The bylaws, amended May 16, also now require approval from at least 90% of CBS’ board for any major business. In its filing, CBS claims that the changes to the bylaws violate state law and that the company doesn’t consider the changes to be lasting.
The Redstone family files a 66-page lawsuit claiming that CBS has no legal right to strip the family of its special voting privileges. The lawsuit specifically goes after Moonves, alleging that he is out of control and that he threatened to leave if the CBS board did not vote to strip the Redstones of their voting control. A footnote in the lawsuit even notes that they “reserve all rights to contest any payments to Mr. Moonves under his employment agreement” — a potential reference to the $180 million he would receive should he leave CBS.
A CBS stockholder group files a class-action lawsuit against the Redstones, asking a judge to rule that nonvoting shareholders are entitled to a special dividend that would give them a say in CBS’ business dealings. Just as the Redstones’ suit went after Moonves, the CBS stockholder lawsuit takes aim at Shari Redstone specifically, accusing her of breaching her fiduciary duties to Class B shareholders and calling her recent move to amend CBS’ bylaws “invalid.”
The latest target in the #MeToo era, the longtime executive is accused of sexual misconduct by six women in a bombshell piece from the New Yorker. The alleged incidents, dating from the ‘80s to 2006, include claims of “forcible touching or kissing during business meetings” as well as assertions that Moonves “physically intimidated them or threatened to derail their careers.” Moonves issues a statement denying the allegations: “I recognize that there were times decades ago when I may have made some women uncomfortable by making advances. Those were mistakes, and I regret them immensely. But I always understood and respected — and abided by the principle — that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone’s career.” Nevertheless, CBS’ independent directors open an investigation into the alleged incidents and CBS stock takes a dive.
In its first meeting since the accusations were made against Moonves, the CBS Board of Directors launches an independent investigation into the claims. However, the board opts not to suspend the CEO — inciting criticism. While Moonves’ wife, “The Talk” co-host Julie Chen, tries to side-step on network’s daytime show, CBS late night host Stephen Colbert addresses the issue head-on: “He gave us the time and resources to succeed and he has stood by us when people were mad at me. I like working for him. But accountability is meaningless unless it’s for everybody, whether it’s the leader of a network or the leader of the free world.”
With the investigation into allegations made against Moonves still ongoing, the focus turns back to Sumner Redstone and specifically the 95-year-old’s health. Ahead of an expected October start date for the trial between the CBS board and National Amusements, a judge denies CBS’ request to allow its lawyers to interrogate Redstone in a deposition. However, the judge also expresses “a great deal of skepticism” about whether the family patriarch is capable of making high-level decisions at National Amusements, saying, “I need to know who is calling the shots at NAI.” The judge gives CBS’ attorneys permission to inspect documents relating to decision-making at Redstone’s company.
CBS shareholders file a class-action complaint against the corporation, saying that they have suffered as a result of the sexual misconduct allegations against Moonves. In the suit, shareholders allege that they were sold CBS shares at “artificially inflated prices,” while also alleging that Moonves and Chief Operating Officer Joseph Ianniello “made false and/or misleading statements” in SEC filings. Furthermore, shareholders call the company’s policies to prevent such workplace misconduct “inadequate.”
The Times reports that CBS Corp. board members and controlling shareholder Shari Redstone have been engaged in on-again, off-again talks for weeks to reach a settlement in the fight for control of the network. The settlement would put an end to the lawsuit filed in May (which was set to go to trial in October) and pave the way for Moonves’ exit from the company after the six allegations of sexual harassment made against him in July. However, questions continue to loom about the size of Moonves’ severance package — rumored to potentially exceed $200 million — and whether he would move onto producing.
Talks of a severance package and a potential segue into producing come to a screeching halt when Moonves is hit with a new round of sexual harassment allegations. Six additional women come forward in a story published by the New Yorker, which also confirms that Moonves had been negotiating his exit package. Hours after the story’s publication, the longtime media mogul officially resigns and Ianniello is named president and acting CEO.
As part of his exit, Moonves and CBS will donate $20 million from his severance package to one or more organizations supporting the #MeToo movement. Moonves’ severance package will be determined once the investigations into the allegations made against him have been completed.
In the same announcement confirming Moonves’ departure, National Amusements confirms that the impending litigation in Delaware about a potential CBS-Viacom merger has been dismissed and there will be no merger talk for at least two years. The board also reveals plans to name six new independent directors.